PUC to scrutinize Uber limo service next

Little noticed in the Sept. 18 Public Utilities Commission’s decision to regulate the tech companies that enable mobile phone-toting private drivers to transport riders for money was a plan to decide next whether the PUC should force Uber Technologies to license its limo service.

Uber, which got its start with a town car service and has subsequently added other offerings, has argued that it is exempt from PUC regulation as a communications service. In theory, a California decision to impose licensing requirements could have implications in other states that are also considering how to handle Uber and similar startups.

Uber officials were conspicuously silent following the ruling, and repeated efforts to get comment from the company were unsuccessful.

The PUC said in its ruling that it is “strongly inclined” to require Uber to get a permit, and will deal with the matter in an upcoming “Phase II” of its ongoing effort to grapple with new Internet services that use smartphones to connect riders with drivers for hire.

“Although nothing is decided until Phase II is officially opened and scoped, the CPUC contemplates conducting a broad review of its existing charter party carrier rules in areas such as insurance, vehicle inspections, passenger safety, and background checks in order to ensure that the rules are working as intended to safeguard public safety, and to determine whether the CPUC should make changes to existing rules and/or promulgate new rules,” said agency spokesman Andrew Kotch by email.

On one thing the commission was not willing to wait, however: It required Uber within 30 days to prove it has commercial liability insurance of at least $1 million per incident, saying “there is a real possibility that parties suffering losses in an incident would find that there is no insurance available to cover their potential claim” because insurance companies might refuse to cover drivers using Uber’s platform.

Further, “based on Uber’s comments in this proceeding, we anticipate that Uber would deny that it has an obligation to insure the parties in the accident, on the grounds that Uber is an app and the limousine driver was already insured.”

The PUC’s ruling Thursday focused primarily on services such as Uber’s “UberX” offering, which, like InstantCab, Lyft and SideCar, uses mobile technology to connect riders with drivers in private vehicles who take requests via mobile phones and ferry people around for money.

Uber also arranges rides in black town cars, SUVs and taxis. The PUC regulates charter party carriers, which includes limousines, while taxis are regulated by local agencies.

Though Uber has called itself “Everyone’s Private Driver,” its terms of service state it is “not a transportation provider.”

Uber is a data-driven tech startup that has raised $307 million since its 2009 founding, and it is already in more than 45 cities in 18 countries around the world, employing something north of 300 people. One of its claims to fame is its extraordinary ability to predict demand and rapidly get vehicles to people desiring rides.

The company has argued that it is not subject to PUC regulation because it is not a provider of transportation, but is instead an information services provider running a virtual marketplace in which riders and drivers make deals.

In addition, Uber has said it is shielded by a recently enacted state law exempting Internet Protocol-enabled services from PUC regulation, and federal and state policies aimed at limiting regulation of information services providers.

The PUC rejected those arguments, and some if its language was far-reaching.

“Because Uber is profiting from this service, it should also be held responsible if the driver is negligent or not applying Uber safe practices,” its ruling stated.

Of note, Uber is facing lawsuits from drivers who claim they were misclassified as independent operators but are actually in all but name employees. In addition, Uber has been named as a defendant by a woman injured when an Uber-dispatched car recently crashed in San Francisco.

Uber calls the independent contractor charges “frivolous.”

As to the injured woman, who was hit by a fire hydrant that became dislodged and flew into the air, Uber expressed sympathy for her, but said it verifies that drivers have insurance as required by state law, and in this case the driver was properly insured.

“For these reasons, we believe that Uber acted appropriately in activating the driver and his business on the Uber technology platform,” the company said.